What is cash?
Notes and coins (money) issued by the federal government
Advantages of Cash?
- it is accepted almost anywhere
- some stores offer discount for cash
- there are no hidden costs
- there is reduced risk of getting into debt
Disadvantages of Cash?
- it can be easily lost or stolen
- it may not be safe to carry around
- if not ATM is available, consumer may not be able to make desired purchase if they don’t have enough cash on them
What is credit?
Credit is the supply of money now in return for the promise of paying it back later, either in full or in monthly payments.
What is interest?
Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.
Advantages of Credit
- avoid necessity to carry around large amounts of cash
- is a convenient payment method for online and telephone purchases
- help you establish a good credit history
- offer cheap use of funds, provided that you always pay your bank in full
Disadvantages of Credit
- easy to overspend and consequently can build up your debt
- can damage your credit rating if you continuously make late payments
What is store credit?
What is Paypal?
Paypal is a intermediary whereby you end up paying for the good using your credit card, bank account, or money stored in your Paypal account.
What is EFTPOS?
(Electronic funds transfer: debit cards and BPAY) is a computerised system in which money is transferred from a consumer’s account to the businesses’ account
What is a direct debit?
It is a system in which the consumer can schedule bill payments from their nominated bank account. The bank then automatically withdraws funds (debits) from your account and electronically transfers the funds to the business requiring payment.
What is a cheque?
A cheque is a written communication ordering your financial institution, called the drawee, to pay a person a specific amount of money.
A payee is the person being paid
A drawer is the person authorising the transaction.
Advantages of Cheque?
- they are safer than carrying cash
- they can be posted safely
- only the named recipient is able to cash the cheque, again making it safer
Disadvantages of Cheque?
- they are not accepted everywhere
- cheques take time to process and clear (more than a day)
- bank charges are involved with having a cheque book
Lay-by?
Lay-by is when you first pay a deposit and then the store puts aside the good for you. You then make regular payments over a fixed period of time. Unlike cash or credit purchases, you do not take possession of or own the good untill you pay off the last installment owing.
What is a bookup?
A book-up is credit provided by a retailer so that you can purchase goods from the retailer’s store and pay the account at a later date. However you must pay back this amount within a set period of time.
Advantages of Book-up?
- you can purchase goods and pay for them later
- intrest is not charged unless you apply for an extension of time
- you can spread your purchases over a week or fortnight
Disadvantages of Book-up?
- some form of security may be required
- unless your you keep accurate records, you may overspend
- charge accounts can be used only in that store
What is AfterPay?
Afterpay is a digital service linked to a customer’s credit or debit card that enables consumers to ‘buy now, pay later’. This service is available to consumers over 18 years old and allows consumers to purchase something at the current price and pay this amount off in four equal instalments every two weeks.
Advantages of Afterpay?
- instant online approval and no application fees
- no annual fees, and no extra payments if you pay on time
- the purchaser receives the good or service immediately
Main disadvantage of Afterpay?
Significant fees are charged if you miss a payment. Afterpay charges a standard fee of $1- late fee per missed payment, and a further $7 if the payments are not received within seven days
Types of Different Payment Methods?
1) Cash
2) Credit
3) Store Credit
4) Paypal
5) Electronic funds transfer: debit cards and BPAY (EFTPOS)
6) Direct Debit
7) Cheque
8) Lay-by
